Residential Real Estate Near Bottom

Notices of Default in California for the second quarter were up about 2.4% over the comparable period in 2008. Housing Wire had the story and it’s a pretty small little data point but I thought the comment they included in their article from the President of Data Quick was worth noting.

Here is what he had to say:

“There is a perception that the housing market is dragging along bottom, that it probably won’t get much worse, and that the lenders need to get serious about processing the backlog of delinquencies, either with work-outs or foreclosure,” said DataQuick president John Walsh.

And servicers are getting serious, according to Walsh, hiring additional staff to handle the pipeline of delinquency cases. But he warned that a push in the servicing space to move these mortgages through either workout or foreclosure will likely lead to a higher volume of foreclosure filings in the third quarter.

You may not be familiar with his firm, Data Quick. They’re located in San Diego and produce some of the most complete sets of information on real estate markets in various state markets. I’ve used their products before and was always impressed with how complete and timely their data tended to be.

Throughout the bubble and its aftermath they’ve consistently called the situation as they have seen it based on their data. Never have I felt they were industry cheerleaders and by the same token I never found them to be the types that bought trouble. Just a firm with a lot of data that seems to draw pretty supportable conclusions in an unbiased manner.

Therefore, I buy their contention that we’re probably around the bottom. That doesn’t mean that were over the pain or that there won’t be a lot more foreclosures to come down the pike, just that we’ve taken the biggest hit we will likely see and now have to suffer some bumps and bruises on the way back up. And, by the way, I don’t know how far back up we go but I suspect any housing recovery is going to be pretty muted.

I doubt that residential real estate is going to contribute much to the recovery of the overall economy for some time to come. That’s a pretty important consideration as normally it is one of the drivers of recovery. At the same time, I think that we are probably past the point at which it subtracts from growth.

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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